10-2 The rate of return that you would earn if you bought a bond and held it to its maturity date is called the bond's yield to maturity, or YTM. If interest rates in the economy rise after a bond has been issued, what will happen to the bond's price and to its YTM? Does the length of time to maturity affect the extent to which a given change in interest rates will affect the bond's price?
10-2 The rate of return that you would earn if you bought a bond and held it to its maturity date is called the bond's yield to maturity, or YTM. If interest rates in the economy rise after a bond has been issued, what will happen to the bond's price and to its YTM? Does the length of time to maturity affect the extent to which a given change in interest rates will affect the bond's price?
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 7PROB
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Transcribed Image Text:10-2 The rate of return that you would earn if you bought a bond and held it to
its maturity date is called the bond's yield to maturity, or YTM. If interest
rates in the economy rise after a bond has been issued, what will happen to
the bond's price and to its YTM? Does the length of time to maturity affect
the extent to which a given change in interest rates will affect the bond's
price?
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